Trade and Poverty: What are the Connections?

International trade and its liberalization can expand the range of goods and services available to the poor and reduce prices of those goods and services, increasing real income and reducing poverty. In practice, trade expansion creates both winners and losers. In the process, trade can reduce relative poverty, absolute poverty, both, or neither, but is usually found to benefit the poor. Cross-country regressions suggest that, on average, economic growth resulting from trade liberalization and openness benefits the poor proportionately with the rest of the population. However, the effects of trade openness on the poor, beyond the effect on overall growth, are not systematic and there is considerable variation across countries and time periods (Berg and Krueger 2002).

ADB encourages websites and blogs to link to its web pages. Articles may be republished without alteration with the attribution statement “This article was first published by the Asian Development Bank (www.adb.org)" and a clickable link back to adb.org.